no more Permanent School Fund backing for school bonds

The text as introduced · 722 words

89R9895 AMF-D

By: Harrison
H.B. No. 5035

A BILL TO BE ENTITLED

AN ACT

relating to a prohibition on the guarantee of public school bonds.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

ARTICLE 1. GUARANTEE OF PUBLIC SCHOOL BONDS PROHIBITED

SECTION 1.001. The heading to Subchapter C, Chapter 45,

Education Code, is amended to read as follows:

SUBCHAPTER C. GUARANTEE OF [ GUARANTEED ] BONDS PROHIBITED

SECTION 1.002. Section 45.052, Education Code, is amended

to read as follows:

Sec. 45.052. GUARANTEE OF BONDS PROHIBITED . (a) Bonds [ On

approval by the commissioner, bonds ] issued under Subchapter A by a

school district or Chapter 53 for a charter district, including

refunding and refinanced bonds, may not be [ are ] guaranteed or

otherwise underwritten by the corpus and income of the permanent

school fund.

(b) A [ Notwithstanding any amendment of this subchapter or

other law, the ] guarantee of or credit enhancement provided for a

[ under this subchapter of ] school district or charter district bond

approved before September 1, 2025, [ bonds ] remains in effect until

the date those bonds mature or are defeased in accordance with state

law.

ARTICLE 2. CONFORMING CHANGES

SECTION 2.001. Section 12.141(c), Education Code, is

amended to read as follows:

(c) The agency shall annually review the amount of funds in

the charter school liquidation fund and transfer any funds

exceeding $2 million[ :

[ (1) ] for use in funding a grant program established

by the agency to:

(1) [ (A) ] encourage high school students to enter the

teaching profession; and

(2) [ (B) ] assist current paraprofessionals and

instructional aides in pursuing the necessary credentials to become

full-time teachers[ ; or

[ (2) to the comptroller to deposit in the charter

district bond guarantee reserve fund under Section 45.0571 ].

SECTION 2.002. Section 43.052(a), Education Code, is

amended to read as follows:

(a) The State Board of Education may incorporate the Texas

Permanent School Fund Corporation and delegate to the corporation

the board's authority to manage and invest[ :

[ (1) ] the permanent school fund under Section 43.003[ ;

and

[ (2) the charter district bond guarantee reserve fund

under Section 45.0571 ].

SECTION 2.003. Section 45.051(1-a), Education Code, is

amended to read as follows:

(1-a) "Charter district" means an open-enrollment

charter school designated as a charter district under Section

12.135 as that section existed immediately before September 1,

2025 .

SECTION 2.004. Section 53.02(10), Education Code, is

amended to read as follows:

(10) "Authorized charter school" means an

open-enrollment charter school that holds a charter granted under

Subchapter D, Chapter 12[ , and includes an open-enrollment charter

school designated as a charter district as provided by Section

12.135 ].

SECTION 2.005. Section 1201.0245(i), Government Code, is

amended to read as follows:

(i) A political subdivision may extend the maturity date of

an issued capital appreciation bond only if:

(1) the extension of the maturity date will decrease

the total amount of projected principal and interest to maturity;

or

(2) the political subdivision is a school district and

[ :

[ (A) ] the maximum legally allowable tax rate for

indebtedness has been adopted[ ; and

[ (B) the Texas Education Agency certifies in

writing that the solvency of the permanent school fund's bond

guarantee program would be threatened without the extension ].

SECTION 2.006. The following provisions of the Education

Code are repealed:

(1) Section 7.055(b)(38);

(2) Section 7.102(c)(33);

(3) Section 12.135;

(4) Section 43.067;

(5) Sections 45.051(1) and (2);

(6) Sections 45.053, 45.0531, 45.0532, 45.0533,

45.054, 45.0541, 45.055, 45.056, 45.057, 45.0571, 45.058, 45.059,

45.0591, 45.060, 45.061, 45.062, and 45.063;

(7) Subchapter I, Chapter 45;

(8) Section 48.273(g); and

(9) Section 53.351(f-1).

ARTICLE 3. TRANSITION; EFFECTIVE DATE

SECTION 3.001. The change in law made by this Act applies

only to a guarantee of or credit enhancement provided for a school

district or charter district bond approved on or after the

effective date of this Act. A guarantee of or credit enhancement

provided for a school district or charter district bond approved

before the effective date of this Act remains in effect until the

date those bonds mature or are defeased in accordance with state

law, and the former law is continued for that purpose.

SECTION 3.002. This Act takes effect September 1, 2025.